/C O R R E C T I V E RELEASE issued by Tucows Inc./
Date:8/13/2009 11:55:00 PM
TSX:TC) a global provider of domain names, email and other Internet services,
today reported its financial results for the second quarter of 2009 ended
30, 2009
"We're pleased that the strong performance of our OpenSRS wholesale
business has contributed to another quarter of solid financial results amidst
generally weak economic conditions," said
Tucows. "Even as our industry started to show signs of the economic downturn
for the first time, our strong competitive position allowed us to achieve
year-over-year growth in domain registrations during the quarter. Our other
services are also performing within plan, positioning us well for the
remainder of the year."
Summary Financial Results
(Numbers in Thousands of US Dollars, Except Per Share Data)
-------------------------------------------------------------------------
3 Months Ended 3 Months Ended 6 Months Ended 6 Months Ended
Jun. 30, 2009 Jun. 30, 2008 Jun. 30, 2009 Jun. 30, 2008
(unaudited) (unaudited) (unaudited) (unaudited)
-------------------------------------------------------------------------
Net Revenue $20,022 $20,450 $40,114 $39,162
-------------------------------------------------------------------------
Net Income 4,480 2,209 5,444 1,127
-------------------------------------------------------------------------
Net Income/Share 0.07 0.03 0.08 0.02
-------------------------------------------------------------------------
Cash Flow from
Operations 2,591 2,580 3,504 2,697
-------------------------------------------------------------------------
Summary of Revenue and Cost of Revenue before Network Costs
(Numbers in Thousands of US Dollars)
-------------------------------------------------------------------------
Revenue Cost of Revenue
-------------------------------------------------------------------------
3 Months Ended 3 Months Ended 6 Months Ended 6 Months Ended
Jun. 30, 2009 Jun. 30, 2008 Jun. 30, 2009 Jun. 30, 2008
(unaudited) (unaudited) (unaudited) (unaudited)
-------------------------------------------------------------------------
OpenSRS:
Domain Services
(Traditional
Domain
Registration) $14,737 $13,269 $11,944 $10,505
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Email Services 874 1,551 153 (24)
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Other Services 1,092 1,137 411 415
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total OpenSRS
Services 16,703 15,957 12,508 10,896
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YummyNames (Domain
Portfolio
Services) 1,456 1,873 251 181
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Hover (Retail
Services) 1,259 2,046 475 577
-------------------------------------------------------------------------
Butterscotch (Content
Services) 604 574 1 6
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total $20,022 $20,450 $13,235 $11,660
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Net revenue for the second quarter of 2009 was
quarter of 2009 was
million
the second quarter of 2009 benefitted from other income of
related to the sale of the Company's equity stake in Afilias and
related to patents that the Company assigned to a third party that continues
to commercialize them, while net income for the second quarter of 2008
benefited from other income of
Company's retail hosting assets. Net income for the second quarter of 2009
also benefited from a gain on foreign exchange of
mark to market gain of
second quarter of 2008. The benefits for the second quarter in 2009 were
partially offset by a provision for current income taxes of
before recognizing a refundable research and development tax credit in
of
Deferred revenue at the end the second quarter of fiscal 2009 was
million
quarter of fiscal 2008 and a slight increase from
the first quarter of fiscal 2009.
Cash and cash equivalents at the end of the second quarter of fiscal 2009
was
of fiscal 2008 and
2009. This increase in cash compared with the first quarter of 2009 is
primarily the result of the generation of cash flow from operations of
million
the Company's equity stake in Afilias last year, which were partially offset
by the repayment of
Conference Call
Tucows will host a conference call tomorrow,
access the conference call via the Internet, go to
http://tucowsinc.com/investors.
For those unable to participate in the conference call at the scheduled
time, it will be archived for replay both by telephone and via the Internet
beginning approximately one hour following completion of the call. To access
the archived conference call by telephone, dial 416-640-1917 or 1-877-289-8525
and enter the pass code 21311901 followed by the pound key. The telephone
replay will be available until
access the archived conference call as an MP3 via the Internet, go to
http://tucowsinc.com/investors.
About Tucows
Tucows is a global Internet services company. OpenSRS manages over 8
million domain names and millions of email boxes through a reseller network of
over 9,000 web hosts and ISPs. Hover is the easiest way for individuals and
small businesses to manage their domain names and email addresses. YummyNames
owns premium domain names that generate revenue through advertising or resale.
Butterscotch.com is an online video network building on the foundation of
Tucows.com. More information can be found at http://tucowsinc.com.
This news release contains, in addition to historical information,
forward-looking statements related to such matters as our business, including
statements regarding the expected expiration date, the number of shares to be
purchased and the purchase price per share. Such statements are based on
management's current expectations and are subject to a number of uncertainties
and risks, which could cause actual results to differ materially from those
described in the forward-looking statements. Information about potential
factors that could affect Tucows' business, results of operations and
financial condition is included in the Risk Factors sections of Tucows'
filings with the Securities and Exchange Commission. All forward-looking
statements included in this document are based on information available to
Tucows as of the date of this document, and Tucows assumes no obligation to
update such forward-looking statements.
TUCOWS is a registered trademark of Tucows Inc. or its subsidiaries. All
other trademarks and service marks are the properties of their respective
owners.
Tucows Inc.
Consolidated Balance Sheets
(Dollar amounts in U.S. dollars)
June 30 December 31,
2009 2008
------------- -------------
(unaudited) (unaudited)
Assets
Current assets:
Cash and cash equivalents $ 7,423,056 $ 5,427,467
Accounts receivable 3,464,428 3,200,362
Prepaid expenses and deposits 3,163,266 2,274,043
Derivative instrument assets 49,245 -
Prepaid domain name registry and ancillary
services fees, current portion 31,494,579 29,212,610
Deferred tax asset, current portion 590,000 590,000
------------- -------------
Total current assets 46,184,574 40,704,482
Prepaid domain name registry and ancillary
services fees, long-term portion 12,195,903 11,855,971
Property and equipment 2,354,702 3,072,958
Deferred financing charges 58,400 78,500
Deferred tax asset, long-term portion 2,410,000 2,410,000
Intangible assets 19,431,471 20,206,996
Goodwill 17,990,807 17,990,807
Investment 100,000 200,000
------------- -------------
Total assets $ 100,725,857 $ 96,519,714
------------- -------------
------------- -------------
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 2,257,992 $ 1,633,830
Accrued liabilities 2,003,789 2,000,146
Customer deposits 3,171,708 3,319,241
Derivative instrument liabilities - 1,974,919
Loan payable, current portion 3,114,242 2,624,242
Deferred revenue, current portion 40,508,091 37,985,821
Accreditation fees payable, current portion 553,447 510,548
Income taxes payable 835,398 -
------------- -------------
Total current liabilities 52,444,667 50,048,747
Deferred revenue, long-term portion 16,392,525 16,201,804
Accreditation fees payable, long-term portion 188,780 187,374
Loan payable, long-term portion 1,063,004 3,235,125
Deferred tax liability, long-term portion 5,396,000 5,396,000
Stockholders' equity:
Preferred stock - no par value, 1,250,000
shares authorized; none issued and
outstanding - -
Common stock - no par value, 250,000,000
shares authorized; 68,969,320 shares
issued and outstanding at June 30, 2009
and 73,073,782 shares issued and
outstanding at December 31, 2008 14,408,078 15,198,358
Additional paid-in capital 47,851,137 48,714,676
Deficit (37,018,334) (42,462,370)
------------- -------------
Total stockholders' equity 25,240,881 21,450,664
------------- -------------
Total liabilities and stockholders'
equity $ 100,725,857 $ 96,519,714
------------- -------------
------------- -------------
Tucows Inc.
Consolidated Statements of Operations
(Dollar amounts in U.S. dollars)
Three months ended June 30, Six months ended June 30,
2009 2008 2009 2008
------------- ------------ ------------ -------------
(unaudited) (unaudited)
Net revenues $ 20,022,119 $ 20,450,329 $ 40,113,543 $ 39,161,536
Cost of revenues:
Cost of revenues
((x)) 14,386,048 13,663,097 28,171,446 26,813,029
Depreciation of
property and
equipment 488,680 816,260 941,389 1,642,097
Amortization of
intangible assets 29,199 31,941 58,398 105,398
------------- ------------ ------------ -------------
Total cost of
revenues 14,903,927 14,511,298 29,171,233 28,560,524
------------- ------------ ------------ -------------
Gross profit 5,118,192 5,939,031 10,942,310 10,601,012
Expenses:
Sales and
marketing ((x)) 1,339,167 1,730,736 2,692,343 3,426,868
Technical
operations and
development ((x)) 1,175,355 1,573,741 2,279,494 3,139,595
General and
administrative ((x)) 1,592,325 1,551,858 3,462,221 3,091,290
Depreciation of
property and
equipment 79,227 58,861 165,632 119,931
Amortization of
intangible assets 360,540 376,954 721,080 762,115
(Gain)/loss in
fair value of
forward exchange
contracts (1,938,821) (225,640) (2,024,164) 29,793
------------- ------------ ------------ -------------
Total expenses 2,607,793 5,066,510 7,296,606 10,569,592
------------- ------------ ------------ -------------
Income from
operations 2,510,399 872,521 3,645,704 31,420
Other income
(expenses):
Interest income
(expense), net (62,334) (166,421) (125,796) (376,405)
Other income 2,613,204 1,532,765 2,613,204 1,532,765
------------- ------------ ------------ -------------
Total other
income (expenses) 2,550,870 1,366,344 2,487,408 1,156,360
------------- ------------ ------------ -------------
Income before
provision for
income taxes 5,061,269 2,238,865 6,133,112 1,187,780
Income tax expense 581,651 30,000 689,076 61,134
------------- ------------ ------------ -------------
Net income for
the period $ 4,479,618 $ 2,208,865 $ 5,444,036 1,126,646
------------- ------------ ------------ -------------
------------- ------------ ------------ -------------
Basic earnings per
common share $ 0.08 $ 0.03 $ 0.08 0.02
------------- ------------ ------------ -------------
------------- ------------ ------------ -------------
Shares used in
computing basic
earnings per common
share 68,923,313 73,899,695 70,778,950 73,894,119
------------- ------------ ------------ -------------
------------- ------------ ------------ -------------
Diluted earnings
per common share $ 0.07 $ 0.03 $ 0.08 0.01
------------- ------------ ------------ -------------
------------- ------------ ------------ -------------
Shares used in
computing diluted
earnings per
common share 69,092,946 75,348,108 70,785,712 75,439,926
------------- ------------ ------------ -------------
------------- ------------ ------------ -------------
((x)) Stock-based
compensation has
been included in
expenses as follows:
Cost of revenues $ 3,367 $ 4,800 $ 8,367 9,100
Sales and marketing $ 15,057 $ 13,000 $ 29,957 31,300
Technical
operations and
development $ 11,121 $ 8,000 $ 21,721 28,700
General and
administrative $ 53,193 $ 47,200 $ 71,893 76,100
Tucows Inc.
Consolidated Statements of Operations
(Dollar amounts in U.S. dollars)
Three months ended June 30, Six months ended June 30,
2009 2008 2009 2008
------------- ------------ ------------ -------------
Cash provided by (unaudited) (unaudited)
(used in):
Operating activities:
Net income for
the period $ 4,479,618 $ 2,208,865 $ 5,444,036 $ 1,126,646
Items not involving
cash:
Depreciation
of property
and equipment 567,907 875,121 1,107,021 1,762,028
Amortization of
deferred
financing charges 9,700 12,700 20,100 26,200
Amortization of
intangible assets 389,739 408,895 779,478 867,513
Gain on disposal
of investment
in Afilias (2,010,395) - (2,010,395) -
Gain on sale of
customer
relationships - (1,121,065) - (1,121,065)
Disposal of
domain names 974 - 1,947 -
Unrealized
(gain)/loss in
the fair value
of forward
contracts (1,938,821) (225,640) (2,024,164) 29,793
Stock-based
compensation 82,738 73,000 131,938 145,200
Change in non-cash
operating working
capital:
Accounts
receivable 252,927 350,043 (264,066) 283,923
Prepaid expenses
and deposits (310,655) (244,926) (889,223) (105,237)
Prepaid fees for
domain name
registry and
ancillary
services fees (496,502) (1,176,196) (2,621,901) (3,706,797)
Accounts payable 561,228 682,896 380,407 249,069
Accrued liabilities (125,130) (159,226) 3,643 (691,064)
Customer deposits 161,969 119,589 (147,533) 18,999
Deferred revenue 249,615 798,720 2,712,991 3,777,654
Accreditation fees
payable (34,302) (22,696) 44,305 34,120
Income taxes payable 750,216 - 835,398 -
------------- ------------ ------------ -------------
Net cash provided
by operating
activities 2,590,826 2,580,080 3,503,982 2,696,982
------------- ------------ ------------ -------------
Financing activities:
Proceeds received
on exercise of
stock options 25,422 9,450 25,422 9,450
Repurchase of
common stock - - (1,811,179) -
Repayment of loan
payable (1,203,560) (7,478,560) (1,682,121) (7,957,120)
------------- ------------ ------------ -------------
Net cash used in
financing
activities (1,178,138) (7,469,110) (3,467,878) (7,947,670)
------------- ------------ ------------ -------------
Investing activities:
Cost of domain names
acquired - (2,524) (5,900) (8,944)
Additions to property
and equipment (102,770) (1,084,209) (145,010) (1,295,740)
Sale of customer
relationships - 1,421,730 - 1,421,730
Proceeds on disposal
of investment in
Afilias 2,110,395 - 2,110,395 -
Decrease in cash
held in escrow - (5,366) - (12,765)
------------- ------------ ------------ -------------
Net cash provided
by investing
activities 2,007,625 329,631 1,959,485 104,281
------------- ------------ ------------ -------------
Increase (decrease)
in cash and cash
Increase (decrease)
in cash and cash
equivalents 3,420,313 (4,559,399) 1,995,589 (5,146,407)
Cash and cash
equivalents,
beginning of period 4,002,743 7,506,468 5,427,467 8,093,476
------------- ------------ ------------ -------------
Cash and cash
equivalents, end
equivalents, end
of period $ 7,423,056 $ 2,947,069 $ 7,423,056 $ 2,947,069
------------- ------------ ------------ -------------
------------- ------------ ------------ -------------
Supplemental cash
flow information:
Interest paid $ 62,508 $ 192,900 $ 128,029 $ 452,237
Supplementary
disclosure of
non-cash investing
activity:
Property and
equipment acquired
during the period
not yet paid for $ 250,734 $ 663,767 $ 250,734 $ 663,767
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